Africa’s boom ‘fails to dent poverty level’

A mineworker works at the rock face at the Impala Platinum mine in
Rustenburg, South Africa, on Wednesday, June 4, 2008. Impala Platinum
Holdings Ltd is the world's second-biggest platinum producer. Photographer:
Nadine Hutton/Bloomberg News

Fast-paced African countries may have growth rates that are the envy of developed economies, but the continent's boom has failed in recent years to significantly dent poverty levels, economists say.

Sub-Saharan Africa is set to grow by 5.6 percent in 2012, according to latest figures from the International Monetary Fund (IMF), with 18 countries hitting at least six percent.

“Sub-Saharan Africa is expected to continue growing at a strong pace during 2013-14, with both resource-rich and lower-income economies benefiting from robust domestic demand,” the IMF said in its latest World Economic Outlook.

According to the World Bank, foreign direct investment inflows rose 5.5 percent in the region last year, against a plunge of 6.6 percent in developing countries worldwide.

The investment-to-GDP ratio is the lowest among developing regions, which the bank likens to pre-boom levels in 1960s China

and 1980s India “suggesting increased scope for further expansion in productivity-enhancing investment”.

Africa's oil and mining wealth means that these sectors dominate the overall flows, but investment has also risen in services such as water, construction, and electricity projects.

States with growing middle classes - such as Nigeria, South Africa, Ghana and Kenya - are also drawing investment to consumer areas such as retail and banking.

Consumer spending makes up more than 60 percent of Africa's GDP, a sector recently highlighted by McKinsey & Company who found urban Africans spent more on clothing and food than those in Brazil, China and India on average.